1.
Feature Story / FCC
OKs Mergers of Telecom
Giants •
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45th Week - 2005 / Like a
magical poof, the Federal regulators approved the
creation of two telecommunications giants Monday,
putting its imprimatur on a major transformation in
the industry.
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The Federal Communications
Commission cleared the way for SBC Communications
Inc. to acquire AT&T Corp. for $16 billion and
for Verizon Communications Inc. to buy MCI Inc. for
$8.5 billion, after Last-minute conditions for
competition help clear the way for SBC to acquire
AT&T and for Verizon to buy
MCI.
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Some competitors and
consumer advocacy groups that opposed the unions
were heartened by last-minute conditions that, for
instance, require the combined companies to make
high-speed Internet easier to obtain. The
indepentdent WiFi and VoIP backers of the deals,
said they would enable their new VATs dial tone and
SIP services to be rolled out more
quickly.
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SBC Chairman Edward E.
Whitacre said the agency's unanimous vote
recognized that the merger would "enhance
competition, help bring new technologies to market
faster and provide real benefits to consumers and
businesses."
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Said FCC Chairman Kevin J.
Martin: "These mergers create strong global
carriers that will vigorously compete both
internationally and
domestically."
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The commission's two
Democrats, though, insisted on conditions intended
to promote competition.
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After the merger, SBC will
be known as AT&T. Both SBC and Verizon will be
required to sell stand-alone high-speed Internet
service. In addition, the two companies agreed not
to interfere with competing online services that
customers choose to
use.
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"Once the public gets used
to the notion that they're entitled to buy DSL
without the carrier's phone service, it's going to
be hard to put the genie back in the bottle,"
Putala said. MORE
EDITOR'S NOTES BELOW
Part
02 / Just
before the FCC OKed the SBC and Verizon buyout,
Sprint Nextel Corp. and four
big cable companies joined forces on Wednesday the
3rd of November, to provide customers with NBS100's
VATs dial tone WiFi, VoIP systems, video, audio and
text over the Internet - in a deal that'll go along
with the FCC
approval of the SBC and Verizon buyout, with
conditions.
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The 20-year arrangement
delivers what backers call the quadruple play of
information services and sets the stage for big
battles with phone giants that are preparing to add
video programming to their own rapidly growing
complement of
products.
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Sprint would split the
$200-million investment with the cable companies:
Comcast Corp., Time Warner Cable, Cox
Communications Inc. and Advance/Newhouse
Communications Inc. The deal gives the cable
operators access to Sprint's network and allows
them to sell wireless services to
customers.
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The VATs wireless mobile
telephone can play video and music and can send
text, just like Sony Corp.'s PlayStation Portable
and Apple Computer Inc.'s iPod do. "The iHandy VATs
wireless, will be a natural trend setter that
started way back in 1907 with the NBS100 wireless
telephone.
Mark Sovol,
said "licensing deals on the iHandy are now
available."
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One
of the new products to be rolled out, for instance,
will be the NBS100 iHandy VATs wireless sidwinder,
that would allow Sprint cellphone users to set
their digital video recorders or see downloaded
programs on their cellphones. FOR MORE STORY SEE
WiFi90.
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Although the Sprint partnership with the
cable firms is a joint venture, no new company will
be formed. Instead, an undetermined number of
executives from each company will form a governance
council to guide managers and determine how to
spend the $200-million investment. Engineers from
each firm will work collaboratively to solve the
technical challenges.
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Sprint will have one vote and all the cable
companies, including others that may join the
venture, will have a single vote, said Sprint
spokesman Scott Stoffel.
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In
the meantime, phone companies such as SBC
Communications Inc. are pursuing their own plans
with their new buyout AT&T, taking the lead as
they did in 1910 and 1913 by the enactment of the
Mann-Elkins Act of 1910, and the 1913 "Kingsbury
Commitment." FOR MORE
STORY.
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SBC, California's dominant phone company,
said the venture was "really no surprise." SBC
spokesman Steven Smith said, "We are already doing
what the cable companies are just starting to
scratch the surface on."
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One SBC product, for example, would let
customers of its majority-owned Cingular Wireless
put the cellphone into a cradle attached to home
phones, turning cellular calls into conventional
land-line calls at home.
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The Sprint-cable partnership deal positions
the cable industry to challenge SBC, Verizon and
other VoIP phone companies in the market serving
small and medium-size
businesses.
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"So many businesses want that quadruple
play," said analyst Steve Hilton at Yankee Group, a
research firm.
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But with similar offerings eventually taking
place around the world, Mark Sovol, of NBS100,
said, "the pitch will be the same, except this time
around, we'll have the VATs WiFi VoIP system we can
work with. Plus
the local "big name" landline phone companies,
located in every city in the world. Our wireless
cemetery program is in full swing." MORE STORY
ABOUT WIRELESS CEMETERIES AND KEEPING TRACK OF THE
DECEASED. /
ALSO
SEE WIRELESS CEMETERY.
//
3.
Editor's Note /
Updating the
Telecommunications Act of 1996. •
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"The order the commission adopts today falls
far short of ideal," said Commissioner Michael J.
Copps. "Yet, clearly, this is better than approving
these mergers without any
conditions."
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A little more than a month ago, Martin had
given his three FCC colleagues drafts of proposed
approvals that carried no significant conditions,
raising the ire of consumers and competitors, said
Christopher Putala, executive vice president for
public policy at Internet service provider
EarthLink Inc. in
Atlanta.
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Opponents found sympathetic ears in Copps
and Commissioner Jonathan S. Adelstein, both of
whom pressed for conditions that guaranteed some
level of competition.
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The same consumer and political forces that
helped shape the merger conditions, he said, should
now turn their attention to Congress as lawmakers
update the Telecommunications Act of 1996.
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"Approval of these mergers undermines more
than 20 years of efforts to introduce competition
into the residential local and long-distance
telecommunications market," said Gene Kimmelman,
public policy director at Consumers
Union.
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Verizon, which already offers stand-alone
DSL, called the combination "undeniably in the
public interest."
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Both Verizon and SBC are upgrading their
networks to take super-fast fiber-optic lines to or
near homes to deliver television programming. They
look to the cable companies as their chief
competitors.
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After the mergers, Verizon would remain the
nation's largest telecom company, based on combined
revenue last year of $92 billion. The new AT&T
would be the next largest with $71.3 billion.
BellSouth Corp. would be third with $20.3 billion
in sales last year.
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The deals can be closed after the FCC issues
a written order, expected this month, and
California and several other states approve
them.
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Analysts say the partnership presages the
day when cable and phone companies compete head to
head for the same customers. It also underscores
the growing dependence between the technology and
entertainment industries as new gadgetry enables
people to slice and dice their media any way they
want it.
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Although the partnership deal is
significant, "probably five years from now, it will
be much more significant," said Mike Paxton, an
analyst for technology research firm In-Stat. "For
competition, it turns up the heat on the phone
companies, but not a huge amount because they've
been talking about doing this for
years."
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Architects of the deal said it would allow
customers to take programming with them wherever
they went.
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"It's truly marrying the fixed line and the
wireless for voice and video," said Weston
Henderek, an analyst for research firm Current
Analysis Inc.
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"What this is about is being able to extend
the consumer experience beyond the home," Comcast
Chairman Brian Roberts
said.
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For instance, the group said it planned to
sell high-speed cellular handsets that could stream
video, make Internet calls and collect voice mails
in a single in-box.
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"The examples given [Wednesday] were
to jazz up the agreement," analyst Paxton said.
"But they're so far in the future that it's
certainly something consumers won't see in the next
12 months. They're probably five years
away."
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Many management and technological challenges
remain.
